If you’re not satisfied with the resolutions offered by the manager, you can file a petition with the U.S. Tax Court after you receive a Statutory Notice of Deficiency. Remember that at this point, any further proceedings on your tax reports or changes will be determined by the Court. CP2000 notices are output by a computer system that detects something is off with your filed tax return.
Request for Verification of Unreported Income, Payments, and/or Credits
You can return your response by mail or fax to the return address or fax number printed on the notice. Use the return envelope if you’re responding by mail, and make sure to keep a copy of the notice for your records. If you need to review your tax return, you can always order a transcript directly from the IRS or partner with a service like 20/20 Tax Resolution. They offer TaxFacts reports that include IRS transcripts as well as any unpaid penalties or balances owed. Collect all the necessary documentation, such as W-2s, 1099s, and other income records, to support your case and verify the information on your tax return. Ensure you respond to the notice timely even if you pay online or set up a payment plan.
CP2000 notices are computer-generated
It could also mean there was a mistake with some of the deductions and/or tax credits you claimed on your return. Maintain records of all communication with the IRS, including copies of your response and any supporting documents you provide. If you think you’ll have trouble paying your taxes or the NFTL filing will cause economic hardship, it’s helpful to know what your options are to address your tax debt. The first thing to do when you receive a CP2000 is to not panic. Sure, when the IRS sends you a notice that your reports are incorrect, it can be overwhelming. It just wants to make sure if the AUR citations are valid and if you agree with such citations.
Steps to Amend Your Tax Return
- You can request a payment plan, file an Offer In Compromise, request Currently Not Collectible status, and if it’s from your spouse, you may be eligible for injured spouse relief.
- Complete the form on page seven of your Letter CP 2000 to show whether you agree or disagree with the changes the IRS is proposing in the letter.
- In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language.
- Payment plans must be repaid in 180 days or less, while installment agreements require monthly payments.
- Identity theft cases can get overwhelming quickly, and maybe a real mess to sort out.
A CP2000 notice is an Underreporter Inquiry that gets issued when the filed tax return does not resemble income information reported to the IRS by third parties. Most often a CP2000 is triggered by a 1099 or W2 that was reported to the IRS, but which you did not include in your tax return. Provide a signed statement explaining why you disagree and supply any documentation to support your statement. Send it (along with the response form) to the IRS address printed on the CP2000.
I’m worried I made the same mistake on another return. What should I do?
If you disagree with the proposed changes in the CP2000 and send the IRS information supporting your claim, the IRS should take between 30 to 90 days to send you its decision. Keep in mind that the IRS can only accept additional information and correct a mistake over the phone if the mistake doesn’t increase or decrease your tax total. If you’re unsure about how to respond to a CP2000 or have complex tax issues, consider seeking the help of a qualified tax professional, such as a CPA or enrolled agent. They’re your guide through this maze, making sure you’ve got all the right paperwork and standing up for you in talks with the IRS whenever it’s necessary. It’s like having a superhero on your side but with a calculator instead of a cape.
There’s also the rare chance the IRS’ software has made an error. Once you respond to your CP2000, the IRS will send you a new, separate tax bill. If you’ve received a CP2000 notice from the IRS and need help sorting out your taxes, Bench (that’s us!) has a specialized team who can help. The worst thing you can do when you receive a CP2000 is to ignore it, which will almost certainly result in additional penalties and interest. If you’re feeling lost, the CP2000 includes a phone number you can call for more information.
How quickly do I need to respond to a CP2000?
If you believe the amount reported by the third party to the IRS is incorrect or does not belong to you, you may need to contact the third party and ask that the item reported to the IRS be corrected. If you agree with our notice, follow the instructions to sign and return the response form in the envelope provided or fax it what is a cp2000 notice to the number shown on the notice. We require both spouses’ signatures if you filed married filing jointly. If you choose to file an amended tax return, be sure to include it with your CP2000 response form. The IRS website recommends writing “CP2000” at the top of your return and attaching it behind your completed response.
- You may also receive a CP2000 letter when the IRS detects a discrepancy between the crypto income you reported on your Form 1040 and the amounts reported to the IRS by crypto exchanges.
- If you want to contest the proposed changes, complete and return the response form indicating that you disagree.
- This discrepancy may cause an increase or decrease in your tax or may not change it at all.
- These tax resolution specialists can help with any aspect of your taxes, including representing you before the IRS.
- Make sure to submit all documents and information to the IRS by the due date to the address in the letter.
Don’t let anything slip through the cracks when filing your return. Be sure to follow the instructions on the notice for proper payment application. If there are additional expenses, credits, and/or income you may want to file an amended return. Sometimes you can just provide the information required and the IRS will accept it.
Making a Direct Payment
In that case, you may want to seek help from an enrolled agent at a tax resolution company. These tax resolution specialists can help with any aspect of your taxes, including representing you before the IRS. Your CP2000 might come with a response letter or form which explains the steps you need to take to approve and submit the proposed changes. The income information the IRS has on file for you, as provided by your employer, your bank, and any other third parties (via W-2s, 1098s, 1099s, and so on).
